French PM Favors Giving Greece More Time On Deficit

06:39, 24th September 2012

(RTTNews) - Backing calls for more lenient bailout terms for Greece, French Prime Minister Jean-Marc Ayrault said in an interview to a French news website over the weekend that the embattled euro member should be allotted more time to cut its budget deficit and implement the planned reforms.

Talking to the news website Mediapart, Ayrault said he favored giving Greece more time to pull through the crisis on condition that it remains sincere in its commitment to reform, particularly the fiscal ones.

"The solution cannot be Greece's exit from the eurozone," he told the website.

Greece has pledged a series of economic reforms and spending cuts worth EUR 11.5 billion for 2013 and 2014 in exchange for a joint EUR 130 billion bailout from the troika, consisting of the European Union, the European Central Bank and the International Monetary Fund.

Greek Prime Minister Antonis Samaras has repeatedly failed to clinch an agreement with his coalition partners on key budget reduction measures and the government was also unable to settle a deal with the troika, which is crucial to secure the next loan installment worth EUR 31.5 billion.

A troika mission left Athens this weekend and said will be back for inspection next week to finalize the terms. Some progress has been made in talks between the troika and Greek authorities on lifting the retirement age and pension cuts, which would together contribute a saving of EUR 9.5 billion.

The troika is expected to submit its report to the Eurogroup meeting to be held on October 8 in Luxembourg, which will then decide the disbursement of the next tranche.

Meanwhile, the discord between French President Francois Hollande and German Chancellor Angela Merkel on the European Commission's proposal for closer ties in the banking sector became clearer at an event to mark Franco-German reconciliation after World War II on Saturday.

Talking to reporters, Hollande said Saturday that the banking union is an important step towards resolving the crisis. "The earlier the better," he remarked. Meanwhile, Merkel said there is no point in doing something fast that do not work out at the end.

Elsewhere, a report by Germany's Der Spiegel on Sunday suggested that the Eurozone governments are preparing to quadruple the capacity of the European Stability Mechanism (ESM) to EUR 2 trillion from the current EUR 500 billion.

Separately, the Financial Times Deutschland reported over the weekend that the Eurozone authorities are preparing to unveil a comprehensive euro rescue package before November, that includes a modified financial assistance program for Greece, a second bailout for Spain and an aid package for Cyprus.